Two global cannabis companies are planning on merging plans and one of them, Tilray, started in Nanaimo.
Tilray and Aphria announced this morning they intend to join forces to create the world’s largest cannabis company and benefit from significant synergies.
The value of the two companies combined is approximately $5 billion Canadian based on their share prices on Dec. 15.
“I still tell our employees and investors that this is day one in this industry and it’s still an industry that has enormous potential over the next decade,” Tilray’s chief executive officer, Brendan Kennedy, said during a video call from Seattle.
Tilray has seen its fortunes rise and fall. Just over two years ago its stock was trading above $214 per share but in the past year it’s traded below $3 as demand for medicinal and legal cannabis has not met expectations.
The two companies say together they will better be able to meet consumer needs worldwide.
“Aphria is essentially doing a reverse take-over of Tilray which simply means that Aphria is going to be the majority stakeholder in the company and that has boosted Tilray’s stock by almost 20 percent today,” said David LeNeveu, an investment advisor with Rockmoor Wealth Management.
Aprhia’s stock price was nearly unchanged. Investment Advisor David Leneveu says there has been much consolidation in the industry and speculation remains.
“With incoming Joe Biden in the United States there’s a lot of talk that potentially cannabis could be legalized more like in Canada down in the states and companies are jockeying for position to try and take advantage of that,” said LeNeveu.
Nanaimo’s Mayor is optimistic.
“Mergers often can and do lead to dismissals layoffs but I’m certainly hopeful that this merger will in fact lead to an increase in employment in our community,” said Leonard Krog, Nanaimo’s Mayor. “Tilray has been a very good employer.”
Tilray’s CEO says the merger should be good for Nanaimo employees.
“Going from being one of the top five or six companies in terms of size in Canada to being the largest in the world that offers some stability,” said Kennedy.
The merger still has to be approved by regulatory bodies, the courts and shareholders.
Once merged principal offices will be maintained in Nanaimo along with New York, Seattle, Toronto, Leamington, Portugal and Germany.
The combined company is considering utilizing Tilray’s existing Nanaimo, British Columbia facility for Aphria’s premium Broken Coast brand to increasingly meet consumer demand for its products.
The two companies announced the merger on their respective webpages this morning.
Kendall Hanson
